Take Note: Health Spending Projected to Grow; Shift More to Government

The Centers for Medicare and Medicaid Services (CMS) recently released its projections for national health spending growth, which it says will average 5.8 percent for 2015-25. This exceeds the expected average growth in gross domestic product by 1.3 percentage points per year, meaning the health care share of the economy is projected to increase over the next 10 years.

The study also finds that the percentage of the US population that is uninsured is expected to be 8 percent in 2025, down from about 11 percent in 2014.

Health Affairs reports the study showed that “projected national health spending growth, though faster than observed in recent history, is slower than in the two decades before the recent recession, in part because of trends such as increasing cost sharing in private health insurance plans and various Medicare payment update provisions. An expected noteworthy shift at the end of the next decade is a change in who ultimately pays for the nation’s health care. By 2025, 47 percent of health spending is projected to be sponsored by federal, state, and local governments — almost 3 percentage points higher than 2014.”

By 2025, the share of health spending by businesses and households is expected to be 3 percentage points lower than it was in 2014. As Health Affairs sums up: “This expected higher share of spending by governments reflects the full impacts from the Affordable Care Act’s coverage expansions, the continued transition of the baby-boom generation into Medicare, and the growing gap between dedicated Medicare financing and program outlays.”